Has the bitcoin fever broken?
Bitcoin prices plunged sharply to below $11,000 on Friday, shedding a third of its value in just 24 hours, according to data from CoinDesk.com. It later rebounded slightly to around $12,000 -- but that's still a stunning 25% less valuable than bitcoin was Thursday morning.
Prices had approached $20,000 as recently as Sunday.
The price drop comes on the back of a few days of bad news for bitcoin, which has still soared by more than 1,000% since the start of the year.
On Thursday, a bitcoin spinoff called bitcoin cash was suspended from one of the most popular exchanges after possible insider trading.
Related: What is bitcoin?
Meanwhile, the U.S.'s markets regulator halted trading in a red-hot bitcoin stock.
Earlier in the week, a South Korea-based virtual currency exchange was forced to close its doors after falling victim to two attacks by hackers in the space of a few months.
The incidents have raised questions about the reliability of cryptocurrency markets, which aren't regulated by governments or central banks.
But some argue bitcoin is just taking a breather -- albeit a big one -- after a furious 2017.
Related: Huh? Tea-maker to become blockchain company. Stock soars
"A correction like we are witnessing today is hardly surprising," said Dave Chapman, managing director of Hong Kong cryptocurrency trading platform Octagon Strategy.
Amid the turbulence Friday, one of the most popular cryptocurrency exchanges, Coinbase, said buys and sells might be "temporarily offline" due to high traffic.
The plunge threatens to take the shine off what's been an incredible year for bitcoin. This time last year the virtual currency was worth less than $1,000.
The rally has been driven partly by the expectation that more and more mainstream investors will begin trading it.
Earlier in December, two major U.S. financial exchanges launched trading in bitcoin futures, which will help give it more clout with big, institutional investors.
Related: Looking to sell bitcoin? It's complicated
Bitcoin's dizzying ascent has prompted a number of high-profile figures in finance and economics to sound the alarm, cautioning that the currency's boom is simply a huge bubble.
Among them are outgoing Federal Reserve Chairwoman Janet Yellen, who described virtual currencies as "highly speculative."
However, Shane Chanel, an adviser at Australian investment firm ASR Wealth Advisers, thinks investors could start shifting their focus to virtual currencies other than bitcoin over the coming months.
"I feel the cryptocurrency madness is only beginning," he said.
CNNMoney's Jackie Wattles contributed to this report.
Bitcoin is booming and so are criminal schemes looking to make money off the trend.
The hype around cryptocurrency is only growing, fueled by the massive rise of bitcoin, the digital currency created in 2009. Its value has skyrocketed by thousands of dollars in the last year, but the price fluctuates regularly.
As the hype grows, so does interest in acquiring digital currency -- both from the general public who might not know much about the technology and hackers who want to profit off it.
"Whenever something gets this much publicity and popularity and there's a potential to make what appears to be free and easy money, the criminal aspects of the world are going to take advantage of it," said Mike Murray, vice president of security intelligence at mobile security firm Lookout.
In order to use bitcoin, you need a digital wallet to receive, send, and store cryptocurrencies. By creating fake wallets, hackers can take advantage of people new to bitcoin and other digital currencies who might not realize the difference between legitimate companies and fake apps.
Lookout recently discovered three fake bitcoin wallet Android apps in the Google Play Store that trick people into sending cybercriminals bitcoin. Some of the apps had thousands of downloads.
Google has since pulled them from the store.
Related: Bitcoin boom may be a disaster for the environment
"They were clearly targeted at people who don't know anything about bitcoin, went on the Google Play Store, and started installing bitcoin stuff on their phone," Murray said.
In addition to fake apps, cybercriminals are creating malware that uses people's computers to generate cryptocurrencies in a process called "mining."
By hijacking a stranger's computer or phone, a hacker puts the work on those devices -- a typically costly and complicated process. Mining requires a lot of computing power to solve complicated math problems, verify transaction records and ultimately receive digital coins.
It's no longer feasible to mine bitcoin with personal computers, but you can do so for other currencies like Monero and Ethereum. Candid Wueest, principal threat researcher for security firm Symantec, said the explosive popularity of bitcoin is further sparking interest in other currencies, and malware creators are exploiting tools to mine them.
According to a report from Symantec, malicious mining activity is on the rise. A hacker can hide malicious code on a website and the site's users become digital currency miners without realizing it.
It can be a lucrative scheme. This week, hackers targeted websites using the Wordpress content management system to infect them with Monero mining malware. The attackers reportedly made at least $100,000.
Digital currency exchanges are also a popular target for hackers. On Wednesday, hackers compromised EtherDelta, a place for buying cryptocurrencies. Meanwhile, South Korean bitcoin exchange Youbit said this week it was filing for bankruptcy after criminals stole almost one-fifth of its clients' holdings in the second major cyberattack on its systems this year.
Carles Lopez-Penalver, intelligence analyst at security firm Flashpoint, said phishing campaigns from hackers posing as cryptocurrency wallets, exchanges, or other websites try to trick people into forking over currency or personal information. Some of these campaigns appear as advertisements on search engines and websites, or in Slack chatrooms where people discuss digital currencies.
Malicious attacks targeting digital currencies and users are only going to get worse, he said.
"The will and drive to target cryptocurrency-oriented industry is here to stay because of the absurd money that has been pumped into it in the past couple of months," Lopez-Penalver said. "It is one of the most targeted industries right now -- it's what cybercriminals are looking for."
The price of bitcoin is down more than 25 percent from an all-time high of nearly $20,000 reached this past weekend, market data shows.
Prices fell to as low as $14,502 to start today's trading session, according to CoinDesk's Bitcoin Price Index (BPI), about 27 percent from the all-time high of $19,783 reported on Dec. 17.
Overall, bitcoin has seen several notable price drops following Sunday's gains, including a dip below $17,000 on Tuesday that accounted for a roughly $1,800 drop on the day. Indeed, analysts have suggested that the price could experience continued volatility as 2017 comes to a close and new money, brought in by bitcoin's meteoric gains, exits for fiat.
But, others may be testing the waters in alternative cryptocurrencies, as bitcoin is far from alone in having seen its price recently hit an all-time high.
According to data from OnChainFX, which charts price developments for cryptocurrencies, all of the top-20 coins by market capitalization have seen an all-time high within the past four days. Of those, cryptocurrencies like bitcoin cash, dash and litecoin have since posted declines in the last 24 hours.
Dropping water image via CoinDesk archive
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
Bitcoin has fallen sharply over the last several days, shaving more than 40% off the all-time high it reached on December 17.
The world's largest digital currency by market capitalization (market cap) declined to as little as $10,834.94, according to the CoinDesk Bitcoin Price Index (BPI).
At this price level, Bitcoin had lost roughly 45% since hitting a fresh, all-time high of $19,783 on December 17, additional BPI figures show.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
FUD
When explaining the reasons for this sharp price decline, several analysts emphasized the impact of FUD (fear, uncertainty and doubt).
"It's clear by now that the entire crypto market is in a massive retracement," said Mati Greenspan, senior market analyst for social trading platform eToro.
"It started with a bit of profit taking but it seems that the FUD is now gripping the market."
Charles Hayter, co-founder and CEO of digital currency platform CryptoCompare, emphasized that while this negative sentiment has been playing a role in Bitcoin's recent losses, other factors have been fueling the decline.
"With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period," he said.
"There's too much volatility to take a risk of being offline."
Interestingly enough, trading of the BTC/USD has been accounting for the majority of Bitcoin's trading activity as of late, according to CryptoCompare data.
Earlier today, BTC/USD transactions made up 57% of all Bitcoin trading, whereas JPY/USD transactions accounted for 21.6%, CryptoCompare figures show.
Earlier in December, JPY/USD trading approached 65% of all transaction activity.
Buying Opportunities
After highlighting the factors that drove the recent losses in Bitcoin, both analysts emphasized that this downturn has helped create buying opportunities.
"Bitcoin has seen an unprecedented rise and a lot of traders have been waiting for this large correction," said Hayter.
Greenspan offered similar sentiment, stating that "Those who have been in this market for a while are not nervous."
"We've seen this type of action many times before," he stated. "In fact, the traders out there have been expecting it."
Iqbal Gandham, UK Managing Director at eToro, stated that investors may be better off taking a long view of digital currencies.
Bitcoin and other cryptocurrencies are best held as a long-term investment. Trying to optimise the bumpy road by buying and selling each trough and peak is lucrative but highly risky. Instead you should take your own view on the future potential of blockchain technology and its different applications, and make your investment decisions from there.
Even though Bitcoin has pulled back lately, it was still up more than 1,000% year-to-date when falling to its recent low of less than $11,000, additional BPI figures show.
Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.
